Correlation Between Sea and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Sea and CompuGroup Medical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sea and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and CompuGroup Medical SE, you can compare the effects of market volatilities on Sea and CompuGroup Medical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sea with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and CompuGroup Medical.
Diversification Opportunities for Sea and CompuGroup Medical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sea and CompuGroup is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sea and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Sea is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sea are associated (or correlated) with CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of Sea i.e., Sea and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Sea and CompuGroup Medical
Allowing for the 90-day total investment horizon Sea is expected to generate 4.24 times less return on investment than CompuGroup Medical. But when comparing it to its historical volatility, Sea is 3.83 times less risky than CompuGroup Medical. It trades about 0.27 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,449 in CompuGroup Medical SE on September 15, 2024 and sell it today you would earn a total of 861.00 from holding CompuGroup Medical SE or generate 59.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. CompuGroup Medical SE
Performance |
| Timeline |
| Sea |
| CompuGroup Medical |
Sea and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and CompuGroup Medical
The main advantage of trading using opposite Sea and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, CompuGroup Medical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.The idea behind Sea and CompuGroup Medical SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CompuGroup Medical vs. Lion One Metals | CompuGroup Medical vs. Sandstorm Gold Ltd | CompuGroup Medical vs. Cannae Holdings | CompuGroup Medical vs. Dine Brands Global |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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